US 4Q 2013 GDP: What You Need to Know

February 28, 2014 04:20 AM
 

Factors contributing to a lowered growth figure.


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The numbers: US fourth quarter 2013 GDP revised down to 2.4 percent.

Expectations: 2.4 percent to 2.5 percent.

 

 

Behind the data: There was a slowdown in inventory investment as GDP less inventory investment (final sales of domestic product) rose 2.3 percent, almost as much as the 2.5 percent growth in the third quarter. But overall consumer spending, while revised down from the initial estimate was a positive contributor.

Revisions to prior 4Q data: There downward revisions in the following areas:

  • Consumer spending on both goods and services with the revisions being fairly widespread.
  • Inventory investment, led by wholesale trade industries.
  • Exports, mainly nonautomotive capital goods and consumer goods.
  • State and local government spending, mainly investment in structures.

 

In contrast, business investment was revised up, mainly in equipment and in software. 

On an annualized basis, GDP for 2013 was put at a 1.9 percent rise, unchanged from the prior month.

Compared to 2012, there was a downturn in nonresidential fixed investment, a larger decrease in federal government spending, and decelerations in personal consumption expenditures and in exports that were partly offset by a deceleration in imports. 

 

PERSPECTIVE: Wintry weather was potentially a culprit in the data for the fourth quarter and if that is the case, the sluggish readings could continue as we move into 2014 as conditions have not been all that positive yet. Still, as evidenced by comments from Fed Chair Janet Yellen Thursday, she (and presumably the other members of the Fed) are not yet convinced wintry weather is the main factor. But as the January-February period has continued to see harsh conditions, a sluggish first quarter 2014 reading cannot be ruled out. The concern point would come, however, if that would continue beyond the first quarter of this year.

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